The trading arm of the Nigerian National Petroleum Corporation (NNPC), Duke Oil, is leaving London to set up in Dubai to be closer to the Asian market, which is fast becoming the main buyer of Nigeria’s crude oil.
While Nigeria once sold much of its oil to the United States, the shale boom displaced that, and the US crude is now competing with Nigeria for buyers in Europe and Asia.
Reports on Duke Oil relocating broke just as oil prices rose more than four per cent yesterday, boosted by a wider market pickup on positive news from China’s services sector, after three days of losses due to fears about a weakening global economy.
It also came on the day NNPC reported a total of 45,347 pipeline breaks on its downstream pipeline network between 2001 and June, 2019.
The global benchmark crude oil was up by over $2.5 or four per cent, at $60.59 a barrel while the United States West Texas Intermediate gained 4.15 per cent, to close at $56.18 a barrel.
Reuters reported that the move by Duke Oil to relocate to Dubai also has tax advantages over keeping the office in London.
India is now the single largest buyer of Nigeria’s crude, and Asian refineries that have started over the past several years are also increasingly selling refined oil products such as petrol and diesel to Nigerian buyers.
Duke is also one of the companies that swaps Nigerian oil for fuel, primarily petrol, in order to supply domestic consumers.
Placing the traders in Dubai will also enable them to travel more easily between the new office, Nigeria, Europe and Asia.
In a filing with Companies House, Duke Oil Services, the part of the company officially registered in London, said it would wind down its operations in the second quarter of this year and move its office to an unspecified new country.
While the primary arm of the group, Duke Oil Company Inc, is registered in Panama, sources told Reuters that traders for Duke as well as the services arm are relocating from London to Dubai.
Duke, a fully owned subsidiary of NNPC, had been based at the corporation’s office in London’s Hammersmith neighbourhood.
Reports yesterday, however, showed that oil prices rose more than four per cent boosted by a wider market pickup on positive news from China’s services sector, after three days of losses.
While the global benchmark crude oil was up by over $2.5 or four per cent, at $60.59 a barrel, the United States West Texas Intermediate gained 4.15 per cent, to $56.18 a barrel.
CNBC reported that the global markets rebounded after a private survey showed that activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in more than a year.
China is the world’s second-largest oil consumer and largest importer.
But United States President Donald Trump on Tuesday warned he would be “tougher” on Beijing in a second term if trade talks dragged on, compounding market fears that trade disputes between the two countries could trigger a U.S. recession.
In a possible sign of tension easing in the energy-rich Gulf, Iranian state television reported yesterday that Tehran would free seven crewmembers of the detained British-flagged tanker, Stena Impero.
The vessel was seized two weeks ago after Britain detained an Iranian tanker off the territory of Gibraltar, which was released in August.
Meanwhile, NNPC has disclosed that it recorded a total of 45,347 pipeline breaks on its downstream pipeline network between 2001 and half year 2019.
Its Group Managing Director, Mallam Mele Kyari, at the Nigeria International Pipeline Technology and Security Conference and Exhibition, organised by the Pipelines Professionals Association of Nigeria (PLAN), said yesterday in Abuja that in 2018 alone, a total of 19 fire incidents were recorded on the petroleum products pipelines.
He added that the theme of this year’s conference: Pipeline Assets: Critical Backbone for Socio-Economic Development, resonated with the thinking at the NNPC on the need to reinforce the narrative of the critical role of pipeline assets to the nation’s energy security and economic progress.
He said it was difficult for the oil and gas industry to deliver much value to the economy without effective and efficient pipelines operations.
“As a major player in the oil and gas industry, NNPC operates over 5,000 kilometers of pipelines traversing many communities to link terminals, three refineries and 20 depots for efficient transportation of crude oil and refined products. In addition, NNPC has over 1,700 kilometers of natural gas pipelines to supply gas to power plants and gas-based industries, including deliveries to trans-national reception points,” the GMD stated.
He lamented that the huge pipeline assets have become difficult to operate efficiently as a result of incessant activities of vandals and other criminal syndicates that were becoming increasingly sophisticated.
Kyari said the corporation was ready to collaborate with PLAN and all stakeholders to respond aggressively to incidence of pipeline vandalism in the country with a view to mitigating them.
He said the current administration was determined to boost domestic gas utilisation to improve power generation and boost industrial growth, stressing that the support of all, especially pipeline professionals, was required to drive the laudable initiative to fruition.